A study on the influence of China's capital account openness on financial stability

Ning Telin;Xie Zhaoyang;

The author constructs Chinese capital account opening index of CAO and chinese financial stability index CFSI, then do empirical research on the relationship of CAO and CFSI during 2013Q4-2015Q4.The quantitative research reveals that there is a negative long-term relationship between CAO and CFSI. When CAO that lags one term rises 1 unit, the CFSI will fell0.343556 units; the degree of the Chinese capital account increases 1 unit, resulting in 0.382401 units felling down of the Chinese financial stability index. China's capital account liberalization has a negative effect on CFSI. In the current stage, due to the opening condition is not yet fully equipped and being aware of the risks, we should be careful to open the capital account.